Forex – Dollar turns broadly lower after U.S. jobs data miss

Dollar drops against other majors as NFP report disappoints – The dollar turned broadly lower against the other major currencies on Friday, after the release of disappointing U.S. employment data dampened optimism over the strength of the economy, threatening the possibility for an additional rate hike by the Federal Reserve this year.

The U.S. Labor Department said the economy added 156,000 jobs in August, disappointing expectations for an increase of 179,000. The unemployment rate ticked up to 4.4% this month from 4.3% in July, confounding expectations for an unchanged reading.

The report also showed that average hourly earnings only rose 0.1% in August, compared to expectations for a 0.2% gain.

The weak data came after a string of mixed U.S. economic reports on Thursday had already dampened optimism over the economy. It was expected to lower chances of another rate hike by the Fed in December.

EUR/USD climbed 0.55% to 1.1970, re-approaching Tuesday’s two-and-a-half year peak of 1.2069.

The euro had weakened following recent reports that a growing number of European Central Bank officials are concerned by the recent strength of the currency.

GBP/USD gained 0.47% to trade at 1.2990, the highest since August 14.

Earlier Friday, data showed that UK manufacturing activity unexpectedly increased in August to a four-month high.

The yen and the Swiss franc turned higher, with USD/JPY down 0.25% at 109.70 and with USD/CHF shedding 0.29% to 0.9563.

Demand for safe-haven assets was also supported by fresh diplomatic turmoil between the U.S. and Russia on Friday.

Tensions re-emerged after the U.S. has told Russia to close its consulate in San Francisco and buildings in Washington and New York that house trade missions in retaliation for Moscow cutting the U.S. diplomatic presence in Russia.

The Australian and New Zealand dollars erased earlier losses, as AUD/USD climbed 0.47% to 0.7981 and with NZD/USD adding 0.13% to 0.7185, pulling away from the previous session’s nearly three-month low of 0.7132.

Meanwhile, USD/CAD dropped 0.86% to 1.2377.

Investors also continued to follow developments in the U.S. oil market as the Gulf Coast struggles to get gasoline flowing as refineries remain shut.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.42% at 92.19 by 08:40 a.m. ET (12:40 GMT), off session highs of 92.80 and at its lowest level since Tuesday.

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